Prof G Markets: ByteDance’s Black Box, Target’s Inventory Turnaround, and the Resale Watch Market

Market Trends

The luxury watch market is experiencing a shift, with Scott Galloway noting that it's not a bubble bursting but a healthy correction. He compares the situation to the diamond industry, where the perceived value is maintained through marketing, yet acknowledges the impact of economic factors like rising interest rates on discretionary spending 1. Scott highlights the dominance of the Apple Watch, which now outsells the entire Swiss watch industry, as a significant factor in this market change 1.

Interest rates absolutely dampen or squelch discretionary purchases because you have to spend more money on the essentials.

--- Scott Galloway

Additionally, he predicts that while retail earnings may show strength, revenue growth will remain lackluster due to these economic pressures 2.

   

Investment Perspective

Scott argues that watches should not be viewed as investment assets, despite the industry's efforts to market them as such. He shares a personal anecdote about losing a cherished watch, emphasizing that these items are primarily for consumption and not reliable stores of value 3. While acknowledging the sentimental value of a nice watch, he advises against considering them as investments, noting that selling a watch often signals financial distress 2.

You buy them for consumption. They are not stores of value or investments.

--- Scott Galloway

Scott suggests that the luxury industry perpetuates myths about value retention to rationalize consumer spending 3.